The recent arrival of Lidl in Serbia represents the start of a process of modernisation of the local retail sector through M&A operations and new investments, according to local media reports.
The discounter has so far opened 23 stores in the Balkan country, initially snatching a market share of 2% to 3% in the process. This is set to rise as there are plans to open 10 to 15 more stores in 2019, targeting mostly cities and towns with a population of around 30,000.
The effects have been positive as Lidl’s low-cost pricing policy mirrors low purchasing power in Serbia. In addition, market leaders Delhaize Serbia and Mercator-S (which is owned by Agrokor) have been forced to make price cuts and increase promotional activity to remain competitive.
Speaking to local daily Politika, EBRD Regional Head of Agribusiness Miljan Zdrale said that this is due to the fact that more than 50% of trade takes place through the traditional independent retail sector.
He pointed out that the development of modern retail can bring benefits to the entire value chain, from suppliers, the primary production, up to logistics and the food industry.
According to Zdrale, there are already indications of possible acquisitions and market consolidation is expected, but added that it is still too early to talk about this in detail.
The alleviation of Agrokor's financing issues in the Balkans will give a positive impetus to new investors, claims Zdrale.
He also expects consolidation in the confectionery, meat and oil industry, as there are currently too many companies operating in these sectors.
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Branislav Pekic. Click subscribe to sign up to ESM: The European Supermarket Magazine